Every Wednesday evening at 8:30, my wife and I switch on the television in our bedroom for our weekly fill of Hardcore Pawn (you should see the raised eyebrows on our friends when we tell them this). It’s a reality show centred on the day-to-day trading and behind-the-scenes shenanigans of American Jewelry and Loan, Detroit’s largest pawnbroker.
It’s compulsive viewing on a couple of levels: not only is it one of the most explicit displays imaginable of the free market in action, but it is a jaw-droppingly honest look at the train wreck that Detroit society has become. Every week sees a new swarm of forlorn, impoverished, wild-eyed, mostly black citizens of what was once America’s most prosperous city, desperate to offload some broken electrical appliance or cheap bracelet of dubious provenance, all for a few dollars. They have their own YouTube channel, which archives all episodes in full from their last four seasons. Here’s a sample:
It’s also remarkable as a microcosm of the attitudes that have come to define the Obama-era United States. Once known as a frontier country, populated with self-reliant, optimistic, confident nation-builders, a people who subdued a continent, invented Coca-Cola, jazz and nylon, won two world wars, flew to the moon, then chewed up and spat out the Soviet Union—all before breakfast—the United States has become infected, slowly but inexorably, with apathy, sloth, victim-obsession, entitlement and mendicancy. In other words, all the hallmarks of an empire in economic and moral decay. To view the self-righteous indignation on a customer’s face as he is told that the diamond ring he wants to hock for five thousand bucks is in fact cubic zirconia and not even worth fifty, retaliating with I don’ care ’bout yo’ shit man, jus’ gimme mah money now, motherf#%$er, is to observe the reductio ad absurdum of “progressive” (read collectivist) society in what was once the world’s most envied economy.
Not to mention the fact that it’s a great belly laugh as it blithely and shamelessly reinforces just about every racial stereotype you’ve ever come across: blacks, Jews, WASPs, Italians, you name it. Straight out of central casting, it is. I didn’t know they were even allowed to make stuff like that anymore. But behind the humour lies a bleak reality.
Detroit is broke. Literally. On 18 July this year, the City of Detroit filed for Chapter 9 bankruptcy protection in the Eastern District of Michigan U.S. Bankruptcy Court—the largest municipal bankruptcy in history to date. Owing approximately 18 billion dollars, or about 0.1% of the entire U.S. Federal debt, city emergency administrator Kevyn Orr is trying to persuade unsecured creditors to accept ten cents in the dollar, while municipal bond yields are soaring towards 20%. A general default is inevitable, yet that would send shock waves through the entire state’s economy, with likely repercussions for the nation as a whole.
And Detroit society, as you saw at the top, has collapsed. According to official figures, 60% of Detroit’s citizens are living in poverty. Half the population are functionally illiterate. A third of the city’s municipal area of 140 square miles is vacant or derelict. And unmarried, teenage pregnancy is endemic. You can buy a house in one of the vacant neighbourhoods for as little as a thousand dollars; indeed, real estate agents have been reported as offering “buy one, get one free”. Police, paramedic and fire departments (what is left of them) have declared parts of the city as “no-go” areas. Having bailed out General Motors and Chrysler—the big end of town—Obama, the “people’s president”, has left the once-proud city to sink into a third-world ghetto.
Sure, he’d bail them out—if he had any money left. But he doesn’t. Kentucky Senator Rand Paul (son of Libertarian 2012 Presidential candidate Ron Paul) said in July Obama would bail out the City of Detroit “over my dead body”. This is significant, because not only does the city manage pension funds of all municipal employees, such as police and firemen, but those municipal employees are not covered by the same statutory guarantees as private-sector employees. And a Detroit bailout, says Paul, would send ominous signals to many other vastly indebted city administrations, most notably in California, that the Obama administration would be prepared to bail them out, too. Retired Detroit street sweepers and city clerks can look forward to reduced pension cheques for the rest of their lives.
The decay started long ago, it is true. Riots in the city in 1967 left over 40 dead and hundreds injured (after the National Guard was deployed by the Governor of Michigan—George Romney, father of Mitt), and precipitated a “white flight”, first from the inner-city residential districts, then, with the gradual decline of the auto industry, from the city altogether. The process was spurred on by real estate agents engaging in the unscrupulous practice of blockbusting, in which realtors would facilitate the sale of one or two houses in a white neighbourhood to black families, or even pay young black women to visibly push baby carriages around the neighbourhood, frightening other white families into selling out below market value.
And while race was not (it goes without saying) the cause of Detroit’s decline, the history of the city’s demographics certainly is emblematic of the causes of decay. At the turn of the 20th century, Detroit’s population, which stood at 285,000, was almost 99% white. Following the rapid expansion of the auto industry after the First World War, a steady, large-scale influx on blacks from the rural south, seeking high-paid factory work, helped increase the population to its peak in 1950 of 1.8 million, 16% of whom were black. Today, the population of just over 700,000 is 90% black or Hispanic; meaning that since 1950, the white population of Detroit has shrunk by 95%! White flight, writ large.
Yet according to distinguished conservative economist Thomas Sowell (who happens to be black),
Before the ghetto riot of 1967, Detroit’s black population had the highest rate of home-ownership of any black urban population in the country, and their unemployment rate was just 3.4 percent.
It was not despair that fueled the riot. It was the riot which marked the beginning of the decline of Detroit to its current state of despair. Detroit’s population today is only half of what it once was, and its most productive people have been the ones who fled.
Treating businesses and affluent people as prey, rather than assets, often pays off politically in the short run – and elections are held in the short run. Killing the goose that lays the golden egg is a viable political strategy.
Detroit is broke, all right. Just like the rest of America soon will be. And the root cause isn’t racial, or even economic. It’s cultural: a toxic culture that abandoned individual responsibility and turned a blind eye to creeping, collectivist Big Government.
The true horror of Marxist collectivism is expressed in this excerpt from Chapter 10 of Atlas Shrugged which I’ve added to the site, and it is chilling in its prescience. Written in 1957 (back when Detroit’s GDP was the highest of any city in the country), the story’s heroine, Dagny Taggart, meets an old man, a survivor from the abandoned ruins of the once-great auto manufacturing city, Starnesville, who tells her the tale of its decline. It’s a long passage, over 5,000 words, but I would encourage all of you who have not read Atlas (or at least, my 2011 book review) to go to it now, and see how closely Ayn Rand’s narrative is a roman à clé, not only of Detroit, or even the United States, but of the entire socially-democratized Western world.
(On that note, I’m heartened to see DT columnists James Delingpole and Daniel Hannan have discovered Ayn Rand, and are now enthusiastically promoting the foresight of Atlas, if not objectivist epistomology per se. Who knows? Maybe she will attract a whole new generation of fans wise enough to read her books for themselves before taking on board her critics’ maledictions.)
So: what is the solution? In terms of structural reform, I read a most interesting proposal in the Mises Daily the week after the city filed for Chapter 9 bankruptcy. Banking expert Patrick Barron’s radical suggestion is a Libertarian’s nirvana, but a totalitarian’s nightmare:
All that Detroit really needs is economic freedom and secure property rights. Give Detroit its freedom from all manner of government, including the federal government. Declare Detroit a free city. (You can rest assured, Detroit, that America will come to your rescue if those bloodthirsty Canadians attack!) In other words, no one would pay any federal taxes whatsoever or be subject to any federal regulations whatsoever. Wouldn’t it be nice not to pay federal taxes, not even Social Security and Medicare taxes? Do the same with Michigan taxes. No taxes BUT also no federal or state aid either.
A Free Detroit would have absolutely no labor and workplace regulations, including minimum wages, mandatory insurance, equal opportunity rules, occupational safety rules, etc. People would be allowed to work together cooperatively for whatever terms their marginal productivity of labor will secure.
End all red tape that thwarts business startups and hobbles its expansion, such as licensing, public health regulations and inspections, zoning restrictions, etc. Do not be concerned that people may be employed in low wage, dangerous jobs against their will. The reality is that business owners must recruit workers and not dragoon them and chain them to their workplaces. Nor are business owners interested in harming either their workers or their customers. If they do, normal civil and commercial law will suffice.
Privatize all government services, such as garbage pickup, water and sewage services, and allow for unbridled competition in these and other areas, even fire protection. Sell off city property (who needs offices that are empty of government bureaucrats anyway?) and deed public housing to its current occupants, making them responsible for their own abodes. You may be surprised how responsible people can be with their own property. End public education and all its costs. Allow the people to get the kind of education that they desire, whatever that may be. Since half the current population of Detroit is functionally illiterate, what’s the risk?
Do you want a safe society? Then let people arm themselves without any licensing requirements. Since it takes Detroit police approximately an hour to answer a typical 911 call, this is simply a practical solution to the basic human right of self-defense. Above all end welfare. The destructive cycle of dependency is driving American cities to the financial and cultural wall.
Do not expect overnight success, but who knows? A free market always surprises us with new innovations. At first one can expect lots of mom and pop startups, sidewalk vendors, unlicensed and untaxed services such as simple property repair, home schools, private taxis, etc. But if Nike and other American businesses are enticed by lower costs and fewer regulatory burdens to outsource their manufacturing operations overseas, why would they not take a good look at a Free Detroit? Expect to be amazed.
As if. One can envisage White House nightly prayer sessions, during which the prostrate Commander-in-Chief enjoins his deity of choice to bring down a plague of locusts on Motown before other states in the Union observe its success, and start getting their own ideas…
But on a more personal level, it is clear that no such proposal could ever succeed, even if given a chance, as long as the population continue to embrace a culture of resentment, entitlement, victimhood, mendicancy and sloth. Individual responsibility—and I know I’m sounding like a broken record, but it bears repeating today—is a precondition of any meaningful claim to individual rights. Detroit’s salvation lies in leaving behind attitudes like this:
And resurrecting attitudes like this:
A return to greatness, or a history-repeating collapse of a once-great empire? Detroit today is the visible face of America’s decline, but with federal debt limits increased yet again, how far off can the rest of the country be? The choice, it seems, lies with the American people themselves, and not their leaders, who too often have presumed themselves to be their masters and not their servants.